The present invention is directed to systems, apparatuses and methods for the management of pre-paid financial instruments such as gift cards, payroll cards, or some forms of debit card, and more specifically, to a system and associated apparatus and method for processing data associated with such instruments or cards in the situation in which the instrument or card has a negative balance.
Financial instruments such as debit cards or credit cards are used by millions of people worldwide to facilitate various types of commercial transactions. One form of debit card is a pre-paid card, that is a card or other data storage device that is “loaded” with a specified amount of funds for use by the possessor of the card. In such cards or data storage devices, the user is provided with a certain amount of credit or purchasing power that they may use to purchase goods and services. As they utilize the funds credited to the card or device, the cost of the purchased goods or services is deducted from the card or device. In this way, the account data reflects a running balance of the funds available on the card or device. The balance information may be used by a consumer to determine how much they have remaining on the card that they can spend, or by a merchant to determine if a consumer has sufficient funds available to complete a desired transaction.
There are multiple types of pre-paid cards or data storage devices possible; two of the most common are gift cards and payroll cards. Gift cards are financial instruments that initially contain a fixed amount of funds and generally cannot be loaded with additional funds; that is, they are typically not able to be recharged or reloaded with additional funds. Payroll cards are a form of re-loadable financial instrument that may be used by an employer to provide an employee with a form of electronic paycheck. Such cards may be reloaded by the employer on a regular basis, with the employee then using the card to make purchases anywhere the card is accepted.
Although in theory such financial instruments should not be able to be used to purchase goods or services in situations where the instrument does not contain sufficient funds for the transaction, there are certain situations where a negative balance may be caused to occur in the account associated with the instrument. A negative balance may occur, for example, as a result of a multi-part transaction where the balance is caused to become close to zero by a first part of the transaction and a second part of the transaction occurs subsequently and without formal authorization, causing the balance to drop below zero. One such transaction might be the use of a gift card at a restaurant. Although the initial part of the transaction is a bill for a meal and requires authorization based on verifying a sufficient balance on the card, the cardholder might then leave a gratuity for the server as part of the transaction. If the gratuity is greater than the amount of funds remaining on the card after payment for the meal, then the balance of the card may become negative.
Another example of a situation in which a pre-paid card or other form of financial instrument might be caused to have a negative balance is when a payroll card balance falls below zero prior to being reloaded by an employer. This might occur, for example, because an employee uses the card to pay for more goods and services than they currently have funds for while waiting for their next paycheck. This situation may be permitted by the card issuer and employer to enable the employee to better manage their needs and cash flow since expenses typically vary from month to month.
As discussed, there are situations in which a pre-paid financial instrument such as a gift or payroll card may be caused to have a negative balance. In some situations, the negative balance may be eligible for a chargeback process, in which a portion or all of the amount of the negative balance may be credited to the merchant who accepted the transaction, or to the issuer of the instrument. Similarly, there may be situations in which a portion or all of the amount of the negative balance may be determined to be the responsibility of the merchant or issuer (one or both of whom may have failed to follow the proper authorization process or adhere to the agreed upon rules for handling such cards); in such cases the responsible party is denied a chargeback and must bear the loss represented by the negative balance.
Processing of negative balance pre-paid cards or similar financial instruments is made complicated by the need to consider a variety of factors when determining if a particular transaction is eligible for chargeback. Such factors include the issuer criteria for initiating a chargeback and the payment processing system regulations governing the chargeback process, as well as any merchant or issuer agreements with the payment processor.
What is desired is a system, apparatus and method for handling negative balance situations for pre-paid cards or other financial instruments.